The Berlusconi government is planning a wide-ranging reform of Italy's secret services in the wake of the September 11 attacks.

Though not licensed to kill, Giacomo Bond, for the first time, will be formally authorised to break the law. Critics say the secret services have been doing just that for years and need no encouragement from parliament.

The reform is due to go into effect by next March and will guarantee impunity to agents who break the law - in the context of operations authorised by the head of government for reasons of state security.

Franco Frattini, the public administration minister, outlined the need for change during parliamentary question time last week. He said he hoped there would be bipartisan support for a law intended to increase the professionalism of the secret services and provide them with adequate operational instruments to face the current terrorist threat.

The initial response from the opposition was not encouraging. A spokesman for the refounded communists said the proposals amounted to an expropriation of parliamentary control over the security services and a suspension of democracy.

Francesco Cossiga, a former president and specialist in security issues, said a bipartisan reform was unlikely in the current political climate: the left was convinced that Silvio Berlusconi and his friends were all thieves, while the right insisted that the post-communists had still not renounced their baby-eating habit.

Italy's secret services, the military intelligence service SISMI and the domestic intelligence service SISDE, already have an unenviable reputation for skulduggery.

Protagonists of the cold war, the secret services were notorious for manipulating terrorism of all political complexions and for muddying the waters of judicial investigations.

The spectacle of senior officers lying for their service in court, and ending up in prison, was not uncommon. Embezzlement, blackmail and participation in the factional feuding of the main political parties were all par for the course.

As the representatives of a faithful but unstable Nato country, the secret services often found themselves operating as vassals of the US Central Intelligence Agency.

There was acute embarrassment in the 1960s when it emerged that the military intelligence service had bugged the president's residence, the Quirinale Palace, and Pope John XXIII's library in the Vatican - as a courtesy to CIA director William Colby.

A more recent and down-to-earth form of malpractice is currently emerging from an investigation by magistrates in Naples.

Investigators have established that a SISDE agent in the city organised the framing of a small-time cigarette smuggler in order to advance his career.

The smuggler, Vincenzo Del Castello, was old, inoffensive and almost blind. He was arrested in 1992 after police found arms, ammunition and drugs in a hold-all under his bed.

Sentenced to eight years imprisonment, Del Castello died while under house arrest in an old people's home.

The smuggler was arrested after a tip-off from a SISDE informant. It was not surprising that the service knew of the arms and drugs since they had been procured from the Camorra, the local version of the Mafia, and planted in Del Castello's home by SISDE agents.

The operation was part of a deal with a leading Camorra boss, who was guaranteed a discount on an outstanding prison sentence in return for the contents of the hold-all and 100 million lire (£30,000) in cash.

Eligio Schiavo (the SISDE agent, now deceased) earned consideration in his department and enabled the civilian security service to gain merit in the battle against organised crime, which is not, in fact, the responsibility of the service, Naples magistrates concluded.

The framing of Del Castello was just one of a series of unscrupulous operations mounted for obscure reasons by SISDE's Naples office, according to the online newspaper Il Nuovo, which publicised the case this week.

The record is not all bad. Some Italian secret service officers are credited with an almost unparallelled mastery of the byzantine politics of the Middle East.

Experts say any reform of the services should eliminate rampant nepotism and reduce the influence of the armed services, preferrably by increasing recruitment from academia.

In the land of Machiavelli, where citizens have a natural penchant for flouting the rules - whether as motorists or taxpayers - a cloak of criminal impunity may not be the first priority for the intelligence agencies.

The opposition is already fearful that the false beards - as spooks are known in Italy - may soon be wielding their daggers in the service of a prime minister with ample private interests to protect.